Have any of you guys been in the "shoe" business?

[DDD]

I have a friend who is excited about becoming a sales rep for a new shoe company.
She shared the info with me this week and even tho I know nothing about shoe sales
it doesn't sound like there is enough profit in the plan. Of course I didn't say that to her but I keep wondering about it.

Has anyone been involved in wholesale or retail sales of shoes? I'm curious what the
standard profit margin is for childrens shoes.

Yes I know this isn't earthshattering but time and again I am amazed by the experience and knowledge of our family. I'd love to know. DDD

 

[donna723]

I don't know the first thing about the shoe business but I was shocked at the prices on some of the shoes when we were looking for some for my 18 month old grandson! For decent brand shoes, the ones in a tiny little size 6 to fit him cost as much as the same type of shoe in adult sizes and probably take one-third of the material to manufacture! Somewhere along the line there has to be quite a bit of profit in it but I don't know who it is that makes it.

 

[susiestar]

Donna, the small size of children's shoes mean that they are much harder to manufacture. They take less material but very specialized machinery, which is one reason they are so expensive. As children's feet are still forming and are very malleable, children should NOT have used shoes for their everyday wear all the time shoes. For dress shoes or special occasion shoes it is fine to wear hand me down shoes or used shoes because they are not worn for days on end. Wearing used shoes every day means that your child's feet will be molded by the way the shoe changed to fit the original wearer's feet. It can make any problems your child has with her feet much worse because the foot will adapt to the shoe instead of the shoe adapting to the foot.

I am not sure what the profit margin is, but it has to be very high or shoes would not be so horrendously expensive. For some reason the market has set the price for shoes very high. I still am mind boggled when I see "normal" athletic shoes priced at over $100!

I did a search for the average profit margin for hte shoe industry and came up with this:

According to the Annual Retail Trade Survey of the Bureau of Census, the annual gross margin as a percentage of sales for shoe retail industry is 42.6% in 2002. This is relatively high compared to food and beverage stores with 28.5 gross margin, gasoline stations at 19.3 and electronics/appliance stores at 27.8%.

Here is a link to the site - it is info about setting up a retail shoe store: http://www.powerhomebiz.com/vol137/shoestore2.htm

I hope that your friend is able to make a wise choice. There are a TON of scams out there. You might gently remind her that if something seems too good to be true, or almost too good to be true, then it is too good to be true. The number one reason that new business ventures go under is that they are under funded at the start.

 

[susiestar]

on the other hand, there is a shoe company with different profit margins. Toms shoes was started with the philosphy that for every pair of shoes that were sold they would give one pair away. I am sure it changes their profit structure, but they are very popular and have some neat styles. They have one boot that is a wrap style. It is like a shoe with an ace bandage that you wrap up your leg. I am dying to get a pair for Jessie to try, given her ankle problems and falls, lol.

 

[KTMom91]

Is she contracting with a company to supply their stores, or is she an independent rep? Back in the day, when I worked for Kmart, they contracted out the shoe department to an outside company, who supplied the merchandise. I would imagine, if she's independent and has to convince companies to carry the line, that there wouldn't be a lot of money in it for her. Businesses aren't as willing to invest in something untried in the current economy.

 

[DDD]

Thanks for the input and the information. She has been given the rights to United States distribution. The manufacturer has been investigated and there is no slave labor involved etc. and the product is 100% soft leather. The designs are appealing.

So...they are really excited that they have such a large protected territory etc. They plan to get sales reps in various states and hope to connect with a few major department store chains.

This friend is the only peer friend I have. Like me she is a retired real estate broker. Her daughter & partner in this new enterprise has a business degree. The problem is (in my mind) that there is not enough differential between cost and retail to make it feasible. In my business there are multiple tiers from manufacturer to end user. on the other hand, I have no experience with retailing. I'm guessing that retailers (especially large ones if you can nail one) wouldn't invest big bucks unless they were netting at least 40 or 50%. Based on what my friend shared with me that doesn't seem possible and I don't see where the income would come from for their State representatives.

If I "knew" instead of "suspected" that I was right, I would share info with her before they move further down the line.
I just hate to think of her losing what little retirement income she has. I appreciate the info you guys have shared and, obviously, I wish her well. DDD

 

[HaoZi]

If it's a fairly exclusive brand, stores may look at it as a way of getting people in the door in the hopes that they buy other things while they're there, so it might really depend on what customer base they're after. Gas stations have minimal profit on the gas they sell, usually about 3 cents a gallon. Their profit comes from getting you to stop for gas then buying other stuff.

 

[busywend]

A shoe store my friend works at has at least 50% mark ups. It is a high end, upscale place where the clearance rack is $40 & up! These shoes start at $90 and go up to $200.